Solar industry on track to impressive growth: A review on Intersolar North America 2010

2010-08-10 | Christian Roselund

Introduction

Intersolar North America is the Western Hemisphere companion to the enormous Intersolar Europe trade fair, and was held July 12-15 at San Francisco's Moscone Center. A team from Solar Server joined the over 20,000 visitors, 2,500 conference attendees, 580 vendors from 26 nations and a further 120 plus PV exhibitors at SEMICON West at this year's show. While we were not able to be everywhere (though this correspondent has never felt the conflict of not being able to be in two places at once quite so sharply), we are pleased to bring you highlights from this year's Intersolar North America.

Far too much went on at Intersolar North America to fit into one article, so we will attempt to give you some broad trends and some of the more important developments. First off, it should be noted that this year's Intersolar North America conference had the emphasis on the second part of the name – despite all of the German, Mandarin and Japanese spoken on the floor of the exhibition, the conference had a tendency to focus on North American markets and had a very American perspective. This showed in multiple ways.

Intersolar North America continued its long-standing international focus with trade visitors representing 66 countries and exhibiting companies from 26 countries, reflecting the global perspectives of the solar industry. Courtesy: Solar Promotion GmbH

The solar industry is in an interesting position in 2010, particularly in North America, with impressive growth and great promise but still many questions to be answered. The effects of the global recession are apparent, if not in solar sales, then definitely in financing and venture capital. The United States still lacks a clear overall policy direction, with the fossil fuel industries and their allies in the US Congress effectively blocking or killing national energy legislation. And finally, global trade imbalances and nationalism are affecting markets and attitudes.

Inverter shortage and new approaches

In an industry known for rapid innovation, inverters are a hot technology right now. These devices, which convert the DC output of solar photovoltaics (PV) to the AC power used in electricity grids, have become a limiting factor for the rest of the PV industry. First off, there aren't enough of them. A number of makers of both large and small inverters sold out in 2009, and many are planning significant capacity expansions to keep up with demand.

Inverters also tend to be the weak link in the longevity of PV systems, as they typically have much shorter lifespans than the 25-30 years projected for most PV modules. Laks Sampath, senior project technical manager at Trina Solar Ltd.'s (Changzhou, China) US division noted at the “Where the Meter Meets the Money” panel that Italian power companies are spending much more on maintenance for their PV facilities – and are making their money back, largely by switching out inverter parts such as fuses and fans to prevent unintended and expensive downtime.

This combination of shortage of supply and obvious design limitations creates an ideal situation for entrepreneurs seeking to “build a better mousetrap”. Solar Server had the opportunity to meet with two of these companies – American Electric Technologies Inc. (Houston, Texas), which has built a “Megawatt-to-Megavolt” power station for large solar farms in desert environments, and Sparq Systems Inc. (Kingston, Canada), which is developing a microinverter which they claim is the most durable in the industry, with an unheard-of 25 year warranty. (Q.v.: "Photovoltaic micro-inverters: Advantages and challenges for rooftop PV systems". Solar Server Interview with Dr. Praveen Jain, CEO of Sparq Systems Inc.) www.solarserver.com/solar-magazine/solar-interviews/solar-interviews/photovoltaic-micro-inverters-advantages-and-challenges-for-rooftop-pv-systems.html

Different inverter companies focus on markets at different scales. Satcon Technology Corp. (Boston, Massachusetts, US) had a big presence at the conference, as did KACO New Energy Inc. (San Francisco, California, US), which manufactures inverters at a smaller scale. A number of other inverter companies were also present.

High optimism for microinvertertechnology

Microinverters have emerged as a new technology to replace “traditional” central inverters. Microinverters convert the DC produced by PV to AC at the modules, avoiding the use of a central collection of DC power and also the potential for serial losses, wherein panels that are shaded, dirty, malfunctioning or otherwise have output limitations limit the output of the entire array.

Sparq's Microinverter; Courtesy: Sparq Systems

Microinverter pioneer Enphase Energy Inc. (Petaluma, California, US) was not present at Intersolar, however Sparq Systems is very confident that their new product will give both other microinverter makers and traditional inverters a run for their money. Sparq has removed the electrolytic capacitors in their inverters, and streamlined the microinverter design, both of which they say will provide longer functional lifespans. They will be releasing their product this fall for the North American market.

Microinverters are more expensive than traditional inverters, and are currently only making headway in small (under 10KW) residential and commercial markets. However, if cost barriers and unfavorable economies of scale can be overcome, it is possible that more module manufacturers could start building modules with microinverters integrated into the final product. Optimism for the technology was high in places; one panelist at a venture capital session predicted that in the medium term microinverters will be less expensive than central inverters, and could replace traditional inverter technology at all scales.

Utility-scale solar takes off

With the maturation of the US solar market in the last few years, utilities are starting to get into the game and take advantage of economies of scale with large PV plants. However, such progress is highly uneven across regions of the US. And while the utility-scale market is the fastest-growing and most exciting part of the US market right now, it too is suffering from uncertainties in both capital and policies.

The global solar market remains policy-driven, and it is not surprising that within the United States, those areas that have passed strong renewable energy policies – such as California – have utilities that lead the nation in installed solar. Meanwhile other areas, including the US Deep South, with few mandates, have essentially no utility-scale solar. While Pacific Gas and Electric Corporation (San Francisco, California, US) officials spoke on one panel, there was no sight of utility giants Entergy Corporation (New Orleans, Louisiana, US) or Southern Company Inc. (Atlanta, Georgia, US), who together control most of the electricity sold in the US Deep South.

Pacific Gas and Electric Company (PG&E) on June 23rd, 2010 officially celebrated completion of its Vaca-Dixon Solar Station, the flagship project of a major new solar energy program launched by the utility

The tightening of capital markets also has an impact, but not enough to stop a number of ambitious projects from going forward. Utilities like PG&E understand that if solar is going to happen, it is better to own the projects, and reap not only the profits but the PR benefits. However, even under these circumstances, utility-scale solar faces a number of challenges, most notably transmission limitations and other technical barriers, but also financing challenges.

Transmission, the challenge of grid integration

Some, like SunPower's (San Jose, California, US) North American Utility Business Unit Managing Director Tom Starrs, see these as the biggest issues facing the industry. “From the industry's perspective, the biggest near term challenge is really grid integration,” stated Starrs at the Utility Scale Solar panel. “The real story is that we are victims of our own success,” adds Starrs, noting that PV growth in recent years has exceeded expectations.

SunPower knows firsthand about that success, as they built the 25MW DeSoto Next Generation solar PV plant for Florida Power and Light (Juno Beach, Florida, US), the largest PV plant currently producing power for electricity consumers in the US. Starr's division is now focused on these large projects, which boast superior economies of scale. Starrs explained that at this point, there is really no freely available transmission in the US, and that until solar gets big enough to start replacing existing coal-powered generation facilities, it will continue to be “a multi-year project of tens of millions of dollars of utility upgrades to connect your line, if you are going to be able to integrate it at all”.

Starrs says the answer is to start building more transmission, but he explained that such a move is not popular, and wondered aloud when this will become a “national imperative”, like the construction of the interstate highway system in the 1950's and 1960's.

Additionally, panelists including AREVA Solar Inc.'s (Mountain View, California, US) Jayesh Goyal spoke to the necessity of improving storage systems or using other means to address the issue of intermittency.

Financing perspectives

The effects of the “Great Recession” were much discussed at Intersolar, particularly at a panel on venture financing. And while it is clear that there still is funding available for technologies and projects, the rules have changed. Investors are more wary of taking risks, particularly long-term risks. Peter Shannon of Firelight Capital, LLC (Philadelphia, Pennsylvania, US) in particular spoke of the need to bring products to market faster, noting that overall less capital is being invested.

There was disagreement about which aspects of the industry were the best bets, with one panelist stating that the value proposition is higher for residential solar, and other panelists emphasizing the economics of large, utility-scale plants in high-irradiation areas like California's Central Valley and Mojave Desert. However, panelists agreed that there would be a shakeout in the industry. Shannon of Firelight Capital noted that it took industry leader First Solar Inc. (Tempe, Arizona, US) 15 years before they reaching profitability – the kind of long-term bets that venture capital is unlikely to take now.

In particular, panelists expressed concerns about the ability of other thin-film solar companies to compete, given rising efficiencies in crystalline silicon. Investors may no longer be patient enough to wait for thin-film to raise its efficiencies, and panelists warned that many of the smaller companies that do not have sufficient capital to weather bad years may be pushed out of the market.

“Super-sized” modules

One of the most interesting ideas from the Intersolar NA conference came from Spire Corporation (Boston, Massachusetts, US) Founder, Chairman of the Board and CEO Roger Little. Little suggested that the utility-scale PV market will move to “super-sized” modules, around the scale of 1KW each, to lower manufacturing, installation and other system costs. Little's numbers were compelling; in one slide, he demonstrated how one 934-watt module could cost less than half as much to produce as four 230-watt modules.

This could have a number of implications for the PV industry. First, such a move would force the industry to become more localized, as transportation costs would favor domestic manufacturing close to the areas where PV plants are planned. “It will be hard to ship kilowatt modules across oceans,” notes Little. This in turn could force a return to domestic manufacturing in the United States, but the largest beneficiaries of such a move could be PV manufacturers with facilities in Europe, particularly in Germany, which has been importing a large portion of its PV modules.

Little says Spire, which has sold manufacturing lines in 52 nations, will introduce a new turnkey production line for kilowatt-scale modules this fall, and expects KW-scale “breeder” modules to be on the market in 2011.

Economic nationalism?

However, if there was a thread that ran through many presentations at Intersolar North America 2010, it was some kind of American economic nationalism, appearing with strange intensity at times. One expects such statements from politicians, who use emotional appeals to secure votes and remain in office; however such messaging also came from industry figures.

"Make it in America"

Perhaps nowhere was this nationalism as apparent as at the SolarWorld AG (Bonn, Germany) press conference. The conference was introduced by SolarWorld US VP of Sales and Business Development Kevin Kilkenny, a veteran of the US Armed Forces, who reminded attendees that the US had led the global solar industry until the end of the 1990s, and then lost that leadership position. Kilkenny seemed to connect solar energy with American patriotism, presenting his company against the backdrop of the nation's dependence on foreign oil and its decline in manufacturing, stating that “unfortunately, even US manufacturers are moving overseas”.

The irony is that despite its plea to “Buy American”, SolarWorld is a German company that acquired American solar manufacturers, though it maintains American production facilities.

The US imbalance of trade

The United States has very real problems with an imbalance of trade. At its most severe in 2006, the United States exported only 55% of the goods that it imported by dollar value. Recently the US Democratic Party has formalized its language of economic nationalism, naming a suite of legislation the “Make It In America” plan, including a bill to form a commission to address the causes of the trade deficit. After thirty years of approving free-market trade agreements, it appears that the pendulum is swinging back. However, the United States has long known that jobs losses could result from these policies, which were more profitable for multi-national corporations than the American people.

The mood of American economic nationalism was many other places at the conference, perhaps because renewable energy has been marketed by US politicians as a way that the nation can rebuild its manufacturing and reduce dependence on foreign oil. With a high degree of denial of global warming, proponents of renewable energy policy have found the “green jobs” and “energy security” arguments stronger.

PV and the balance of trade

However, this is one field where the imbalance between the market and production is not as great. The United States produced 5.2% of the world's supply of solar cells and modules in 2009, but it installed only 6.6%. Furthermore, the United States is benefiting from jobs and revenue throughout the PV supply and installation chain, not just in the production of cells and modules. The nation is the world's leading producer of polysilicon, with one company, Hemlock Semiconductor Corp. (Hemlock, Michigan, US) producing 36,000 metric tons annually. In an interesting reversal of roles, China is a large net polysilicon importer, and the US a significant exporter.

With significant research and development through its many universities, the United States is a leader in research and development. The nation also has an enviable position in both solar manufacturing equipment production, through companies like Applied Materials Inc. (Santa Clara, California, US) and Spire Technologies, and in system components. And finally, PV installation – which still makes up a large portion of system costs, particularly in small systems – cannot be “off-shored”.

The rise of Chinese manufacturing has made it difficult for many industries in the United States to compete. However, in the PV industry Germans are more likely to feel the impact than Americans. European PV cell and module shipments declined 14% from 2008-2009, and over the last five years PV production has not kept pace with demand.

Other themes

The company that shall not be named

Though it had no booth on the floor of the trade show, FirstSolar cast a long shadow over Intersolar North America. Experts on many panels often alluded to the success of the thin-film giant, at times referring to FirstSolar as “the company that shall not be named”. On a utility-scale thin-film panel, Forest Collins of Juwi Solar GmbH (Wörrstadt, Germany) asked “Who will be Second Solar?”

Respect for the company's business abilities was widespread. “FirstSolar executed a solid business strategy,” stated veteran PV industry analyst Paula Mints of Navigant Consulting (Chicago, Illinois, US). “They identified a market and they figured out how to sell to it.”

Off-grid PV in the developing world

Though it has yet to evolve as a large or highly profitable industry, Intersolar North America gave substantial attention to off-grid solar in the developing world, dedicating a panel to developing world solutions and holding the Solar for All awards ceremony on the conference's opening night.

This year's prize was won by Greenlight Planet Inc. (Riverside, Illinois) for their SunKing line of solar lamps, but other companies including Kaïto Energy AG (Munich, Germany), Promethean Power Systems (Boston, Massachusetts, US) and Phaesun GmbH (Memmingen, Germany) also unveiled interesting products including a public charging system with modular products and a solar hybrid milk chiller.

Upgraded metallurgical grade silicon

The crystalline silicon performance panel presented recent advances in upgraded metallurgical grade silicon (UMG), with UMG producers claiming that previous efficiency differences between UMG and semiconductor-grade silicon had largely been eliminated through the use of various treatments. Semiconductor-grade silicon is produced to very high purity, and is expensive to produce. UMG holds promise for additional cost reductions for the crystalline silicon PV industry, if manufactured on a similar scale.

Solar water heating – not so hot in the US?

Intersolar held a number of panels on the solar water heating industry, but despite the obvious advantages of the technology including lower retail costs, the solar water heating market is not well developed in the United States. US consumers prefer “sexier” PV technology, and China makes up a large majority of the market solar water heating systems. The US state of Hawaii, which has much higher retail utility rates than the US, is an exception. Hawaii passed a law in 2009 that went into effect on January 1, 2010, whereby new residential construction must include solar water heaters.